Mortgage Pre-Approval: For Serious Home Buyers
If you're considering getting into the real estate market for the first time, think about pursuing mortgage pre-approval before you start to search for a home. Real estate agents and sellers take you more seriously, along with your offer, when they know that you know how much you can purchase and that you're credit-worthy.
This is a good time to buy a home, since interest rates are low and there's plenty of supply available. When you know how much you can qualify for, choosing the home and location you want becomes simpler. Although the Internet is a great tool for finding homes, the actual process involves substantial time looking at properties, so being able to pare the list down to a manageable size saves your time and energy.
The Process
A Realtor or lender can help you start the mortgage pre-approval process. You'll need to have your W2 statements or 1099s and federal tax returns for the last two years, several months of bank statements, along with current pay stubs or proof of income from other sources.
The lenders verify your information and look at your debt load and credit history. If you don't represent much of a risk, they'll let you know the maximum loan amount for which you qualify and the interest rate. When you seek mortgage pre-approval first, you'll also learn about different loans and programs that can benefit you when you're buying a home.
The Results
Armed with that information, you can go forward with the home purchasing process without being concerned about the unknowns when buying a home. A seller is more likely to accept an offer when she knows that the buyer has mortgage pre-approval because it signals that he's serious and poses little risk of not qualifying at the end of the purchasing process. Realtors take buyers who have already been approved more seriously and may go an extra mile for them in the search process.
Getting pre-approved doesn't take much time and the payoffs are tangible and immediate. It doesn't cost anything, and it opens the door to homeownership faster, speeding up all the benefits of having your own home.
Where to Start
Download the free eBook we put together: "The Essential Guide to Buying Your First Home." This guide goes through the home buying process from the lender's point of view. From FICO credit scores to appraisals to down payments, you'll better understand the buying experience once you finish this 12-page guide. Get your free copy at the button below.
(sold photo: Flickr user AKZOphoto)